Havilah Resources : Quarterly Activities/Appendix 5B Cash Flow Report

ASX MEDIA RELEASE

25 February 2022	ABN 39 077 435 520

For personal use only

Havilah Resources Limited (Havilah or the Company) (ASX: HAV) is pleased to present its Activity Report for the 3 months ended 31 January 2022 (quarter).

Significant Events for the Quarter

• Continued focus on several key pre-development tasks, which directly advanced progress of the proposed West Kalkaroo gold open pit (West Kalkaroo).
• Inclusion of the Kalkaroo copper-gold-cobalt project in the Australian Critical Minerals Prospectus 2021, highlighting the appreciable critical minerals potential of the Kalkaroo deposit.
• Confirmation of copper-cobalt sulphide lode at shallow depth in recent Mutooroo pre-feasibility study (PFS) open pit resource extension drilling. Encouraging grades of copper-cobalt mineralisation, including:
• • 5 metres of 1.7% copper, 0.18% cobalt and 0.13 g/t gold (including 2 metres of 2.13% copper, 0.22% cobalt and 0.19 g/t gold); and
  • 5 metres of 1.01% copper, 0.12% cobalt and 0.09 g/t gold (including 3 metres of 1.67% copper, 0.19% cobalt and 0.12 g/t gold).
• Accelerated Discovery Initiative (ADI) Round 3 - Expression of Interest application entitled 'Exploration Drilling - Benagerie Dyke' has advanced to the next stage.
• Annual General Meeting of the Company was held on 21 December 2021, with all resolutions passed by poll without amendment.
• 3,529,529 new ordinary shares were issued at $0.17 per share via share placements that raised $600,020 (before costs) from institutional and sophisticated investors.
• Commencement of 2022 exploration drilling is awaiting delivery of a new more powerful compressor, which has been delayed by shipping transport bottlenecks.

Advanced Project Activities

Kalkaroo Copper-Gold-Cobalt Project (HAV 100% ownership)

During the quarter Havilah's management team continued to focus on several key pre-development tasks that directly advanced progress of the proposed West Kalkaroo open pit gold mine as summarised below.

1. Final South Australian government approvals
   Key to the regulatory approvals process is acceptance of the Program for Environment Protection and Rehabilitation (PEPR) document by the Department for Energy and Mining (DEM). The West Kalkaroo PEPR document was lodged during March 2021 and first substantive feedback was received from the DEM during August 2021. Since then, Havilah's management team and an environmental consultant have worked to systematically address all points raised by the DEM. Several additional consultant's reports and reviews of groundwater and the tailing storage facility have been requested. To date no issues have been raised that would inhibit development of the mining operation in its presently proposed form.
   At this time, Havilah has largely completed the revised West Kalkaroo PEPR document that addresses all of the DEM's feedback points. Two required key consultant's reports remain outstanding, one that peer reviews a consultant's tailings storage facility design report and another that evaluates Havilah's capability to execute on its mining development plans. Havilah plans to relodge the PEPR document within the next month, subject to timely delivery of the outstanding consultant's reports. This should lead to final approval for go-ahead of the West Kalkaroo gold open pit mining operation during 2022. This represents a major investment of time and money by Havilah, which in the end will ensure that the mining operation meets world's best practice mining regulations and ESG (Environmental, Social and Governance) standards.
2. Mining contractor
   Havilah continues to engage in discussions with reputable mining contractors. To this end Havilah has provided key scheduling, haulage and other logistical details to mining contractors with the view to receiving firm mining cost estimates that can be used in the West Kalkaroo financial model. There is a large amount of barren overburden to remove at West Kalkaroo to access the ore, hence any incremental reduction in mining rates and adoption of the most efficient mining technologies could result in material cost savings.

Havilah Resources Limited Activity Report for the 3 Months Ended 31 January 2022

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1. Financial model and mining study
   Havilah's senior mine planning engineer and consultants have continued to refine the West Kalkaroo mine design and financial model using updated cost inputs. Favouring the economics are the soft, easy to mine overburden and the mostly gravity recoverable free gold. RPM Global Asia Limited (who prepared the original Kalkaroo pre-feasibility financial model) is completing an updated mining study, which integrates all new technical work completed for West Kalkaroo over the past 3 years. Completion of this study is awaiting receipt of firm mining cost estimates from contractors, which can then be incorporated into the final financial model.
2. Project financing
   Havilah's management team continues to investigate suitable financing options for West Kalkaroo. Havilah's present intention is to seek maximum project debt financing to minimise dilution of its current 100% Kalkaroo project equity interest. From discussions so far, it is apparent that finalisation of project financing arrangements are critically dependent on receipt of final South Australian government approvals and completion of a high quality feasibility study. Havilah continues to remain receptive to alternative investor financing options that would allow quicker ramp-up of copper production following removal of overburden and exposure of the large copper sulphide orebody.

Development of the open pit gold mine at West Kalkaroo is subject to a final investment decision by the Havilah Board during 2022, which is contingent on successful conclusion of the key tasks listed above amongst others.

Critical Minerals

Austrade's Critical Minerals Prospectus 2021, published last quarter, showcases the Kalkaroo copper-gold- cobalt project on page 16. The Australian government has recognised during the last few years the importance of critical minerals, and the significant opportunities for Australian companies to develop them.

Over the last 12 months the prices of certain critical minerals in the Kalkaroo deposit, most notably cobalt and the magnet rare earth elements (REE - neodymium, praseodymium, erbium and terbium) have in most cases almost doubled. During the past 2 years Havilah has completed a considerable amount of research on the recovery of REE metals from the West Kalkaroo ore in collaboration with the Future Industries Institute at the University of South Australia. Results to date provide grounds for cautious optimism that recovery paths can be defined that will allow potentially significant revenue to be generated from cobalt and REE by-products.

About the Kalkaroo copper-gold-cobalt project

Kalkaroo is Havilah's flagship mineral project, located approximately 400 kilometres (km) northeast of Adelaide and 90 km west of the regional mining centre of Broken Hill with its skilled mining workforce. It lies approximately 55 km north of the Transcontinental railway line and Barrier Highway. The project comprises a

100.1 million tonne (Mt) JORC Ore Reserve (Proved 90.2 Mt; Probable 9.9 Mt) at a copper equivalent grade of 0.89% that is capable of supporting a large-scale open pit mining operation over at least 13 years. Havilah has already secured the required mining permits for the Kalkaroo project (Mining Leases and Miscellaneous Purposes Licences). It also owns the surrounding 534 km2 Kalkaroo Station pastoral lease, a non-mineral asset on which the Kalkaroo project is located, thus reducing land access risks for the project.

Havilah has a staged strategic plan to develop the Kalkaroo deposit, commencing with a lower capital expenditure operation that initially focuses on mining the comparatively shallow and soft oxidised gold and native copper ore at West Kalkaroo. The proposed West Kalkaroo gold open pit is located at the very western (and upper) part of the Kalkaroo deposit, where it is planned to produce 80,000-90,000 ounces of gold and 5,000 tonnes of native copper (near pure copper metal) over an initial 3-4 year period. The current West Kalkaroo oxidised ore open pit is designed to lead into the long-term,large-scale copper sulphide mining operation at the earliest opportunity, subject to prevailing metal prices and availability of financing.

Kalkaroo is projected to be a future source of ethically produced metals vital to modern society, operating under industry best practice ESG (Environmental, Social and Governance) regulations that are enforced by the South Australian government. ESG credentials for Kalkaroo can be found on the Company's website.

Havilah Resources Limited Activity Report for the 3 Months Ended 31 January 2022

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onlyuse personalForFigure 1 Havilah's deposit, prospect and tenement portfolio in northeastern South Australia, near Broken Hill.

Mutooroo Copper-Cobalt-Gold Project (HAV 100% ownership)

Mutooroo is Havilah's second advanced stage copper-cobalt project that is located within commuting distance of Broken Hill, and 16 km south of the Transcontinental railway line and Barrier Highway. It contains 195,000 tonnes of copper, 20,200 tonnes of cobalt and 82,100 ounces of gold in Measured, Indicated and Inferred JORC Mineral Resources (see JORC table below). As such, Mutooroo is one of the largest and highest-grade sulphide cobalt deposits associated with copper in Australia.

Havilah Resources Limited Activity Report for the 3 Months Ended 31 January 2022

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Havilah is undertaking a PFS on the Mutooroo project as a proposed 1 million tonne per annum throughput copper and cobalt producer, based on current JORC Measured Resources, initially from an open cut mine that transitions to a longer-term underground mining operation. The present drilling campaign is designed to boost open pit resources to sustain an initial 5-year open pit mining operation.

Seven reverse circulation (RC) drillholes were completed at Mutooroo during the quarter (refer to ASX announcement of 17 January 2022). This drilling is part of the Mutooroo PFS with the primary objective to test for shallow, open pit copper-cobalt sulphide resources along strike from the existing Mutooroo resource and conceptual open pit design and below the shallow oxidised copper ore that was exploited via several historic mine shafts (Figure 2).

Figure 2 Long section of the Mutooroo copper-cobalt sulphide lode zone, showing the Mutooroo resource and conceptual open pit (brown colour) in the south. The area with resource expansion potential, which is the subject of the current PFS open pit extension drilling, is shown in grey. Yellow stars identify lode intersection positions for recent drillholes. Drilling sections A-A' and B-B' as shown in Figures 3 and 4, are marked.

Recent open pit extension drilling confirmed the presence of 1-5 metre thicknesses of copper-cobalt massive sulphide lode, consistent with historical records of the sulphide lodes in cross-cuts in the mine workings in the vicinity, with significant assay results of:

	Hole Number			From			To			Width			Copper %			Cobalt %			Gold
			(metres)			(metres)			(metres)							g/t
	MTRC232	66		71		5		1.01		0.12		0.09
	including	67		70		3		1.67		0.19		0.12
	MTRC233	95		100		5		1.7		0.18		0.13
	including	97		99		2		2.13		0.22		0.19
	MTRC235	19		26		7		0.51		0.02
	including	19		23		4		0.77		0.03
			82		84		2		0.66		0.15		0.07

A trend of increasing grade-thickness of the copper-cobalt sulphide lode with depth in drillholes MTRC232 and MTRC233 (see cross-sectionA-A', Figure 3) is encouraging because elsewhere at Mutooroo such trends have pointed to appreciable (>15 metre) thicknesses of sulphide mineralisation at depth. Further deeper drilling beneath drillhole MTRC233 will be required to test this case.

Havilah Resources Limited Activity Report for the 3 Months Ended 31 January 2022

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Figure 3

Drillhole cross-sectionA-A' showing recent Havilah RC drillholes (MTRC232 and 233) in relation to earlier Havilah drillholes that define the Mutooroo copper-cobalt sulphide lode.

Note the oxidised

copper mineralisation near surface in earlier drillholes MTRC173 and MTRC174.

Figure 4

Drillhole cross-sectionB-B' showing recent Havilah RC drillhole MTRC235 in relation to earlier Havilah drillholes that define the Mutooroo copper- cobalt sulphide lode. A hangingwall lode position was also intersected in this drillhole.

Note the oxidised

copper mineralisation near surface in earlier drillholes MTRC164 and MTRC165.

Also of note is a second shallower (hangingwall) lode intersected in drillhole MTRC235 (see cross-sectionB-B', Figure 4). The hangingwall lode corresponds with a gossan outcrop mapped on the surface. The presence of discrete parallel hangingwall and footwall lodes is a feature of the Mutooroo deposit that was indicated by earlier drilling and has potential to boost resource tonnages and enhance economic viability of open pit mining.

Havilah Resources Limited Activity Report for the 3 Months Ended 31 January 2022

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